🤑Borrow
Withdraw a loan based on your collateral value.
Deposit MEME to borrow USDT
Borrow section is accessed in NUKEM LOANS interface.
Once selected, the next interface is presented:
Here, users can choose the collateral asset and amount they want to use for their borrowing position, along with the asset and amount of debt they want to withdraw. By choosing collateral and debt assets, Users are essentially selecting the market from which they wish to withdraw a loan.
Example:
| Collateral | Debt | Market Name |
|---|---|---|
NUKEM | USDT | USDTNUKEM |
USDT | NUKEM | NUKEMUSDT |
FLOKI | USDT | USDTFLOKI |
If the 'I will deposit' section is clicked, the following window with all potential collaterals pops up:
After choosing the collateral, the User can select the debt ("I will borrow") from the assets available as debt for the chosen collateral:
Before initiating the loan, users can check the Transaction Info, which provides a representation of collateral and debt amounts before and after the transaction. The most crucial metric, Loan-To-Value (LTV), is displayed below this information and represents the ratio between collateral value (margin) and outstanding debt. If the LTV reaches the liquidation threshold point, the position will be auctioned for the liquidation process.
Through the selection of the loan amount, the user has the capability to fine-tune their collateralization ratio, thereby influencing the risk of potential liquidation for the associated position, and this ratio can be modified post-loan initiation by adding additional assets to the dedicated collateral vault or by partially repaying the debt.
Initiating the loan
Loan is initiated in a same way as all other actions on the Nukem Loans plaform:
Click on Approve button
Sign the signature request in the Metamask
Click on Borrow button
Confirm the transaction in the Metamask pop-up by clicking on Confirm button
Congrats! You have initiated your first loan on Nukem Loans platform!
Users should diligently monitor their positions and the collateralization ratio to mitigate the risk of liquidation, as it's important to recognize that the debt accumulates daily due to compounding interest, which means a user may face liquidation even in the absence of significant price fluctuations in the assets used for collateral and the debt itself.
Positions with a debt-to-collateral ratio exceeding 80% are considered highly risky, and we strongly recommend maintaining ratios below 50% for enhanced risk management.
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